South By North Strategies, Ltd.

Writing in The New Yorker, James Surowiecki points out that there is “no end in sight” for the millions of unemployed Americans, especially the long-term unemployed. And to make things worse, policymakers refuse to act.

You’d think that Congress and the Federal Reserve would be straining every sinew to avoid such a fate. It isn’t as if they’re out of tools. A more aggressive monetary or fiscal policy, or both, would help put lots of Americans back to work. We could also follow Germany’s example and subsidize job-sharing programs, which have helped Germany bring down its long-term unemployment rate despite the recession. Sadly, there’s little sign that policymakers have much interest in using these tools. The inertia can be chalked up, in part, to ideological hostility from those who are opposed to more government spending or to anything that might increase inflation. But the bigger obstacle may be psychological: the longer unemployment stays high, the likelier people are to get used to it. Five years ago, an unemployment rate of seven and a half per cent would have seemed outrageous, but it’s possible that five years from now it will seem not so bad. A long-term crisis, after a certain point, no longer seems like a crisis. It seems like the way things are.